Last year was a record-breaking home-building year in the state of Utah, helping to erase a statewide cumulative housing shortage, according to a report commissioned by the Salt Lake Board of Realtors.
In 2021, the number of new housing units permitted far exceeded that of new households (marriages, divorces, students going to college, net in-migration, etc.) — 40,144 housing units compared to 26,689 new households{mprestriction ids="1,3"}, according to James Wood, author of the report and the Ivory-Boyer senior fellow at the Kem C. Gardner Policy Institute at the University of Utah. After the record year of 2021, the statewide cumulative housing shortage now stands at 31,000 compared to about 56,000 in 2017.
“The housing shortage should not be interpreted as 31,000 homeless households, but rather as an indicator of a 'tight' and unhealthy housing market characterized by very low vacancy rates and a growing share of households doubling up,” the report noted. “Nevertheless, a housing shortage persists at a much lower level.”
Last year’s building boom was driven by single-family homes, which comprised 17,528 units, or 44 percent of the share of all permits issued. Coming in second place were 14,143 permits issued for apartment units (35 percent share), the highest annual number of apartment permits issued in Utah’s housing history. Condominiums and townhomes took the third spot at 7,895 permits (20 percent share).
Nearly one-third of all single-family permits issued statewide were for homes in Utah County, a total of 5,512 units in 2021. Three cities, Eagle Mountain, Saratoga Springs and Lehi, accounted for 60 percent of these permits. Washington County ranked second with over 3,000 single-family permits. Salt Lake County’s ranking dropped to third in 2021, with 2,235 single-family permits. Since 2019, Washington County has challenged Salt Lake County’s position as the second-ranked home building county, and in 2021, Washington County clearly captured that ranking with 700 more single-family permits than Salt Lake County.
In 2021 the median price of existing homes far exceeded the median price of new homes. Historically, new home prices have been higher than existing home prices. In Salt Lake County, since 2005, the median price of a new home has typically been 18 percent higher than that of an existing home. In Salt Lake County, the median price of an existing home in the second quarter of 2022 was 25 percent higher than the median price of a new home ($603,000 vs. $482,300).
“Why the switch? Location, location, location,” the report said. “Many new home developments are on the periphery, hence considerable distance from employment centers. Thus, the price gap is partly an indicator of the premium the homebuyer will absorb or pay for an existing home closer to employment centers, thus avoiding long commutes from far-flung new subdivisions.”{/mprestriction}
